The South African government has announced a new production incentive (PI) programme for companies in the leather sector.

The idea behind the programme is to support companies’ efforts to increase competitiveness by providing upgrade grants and subsidies to working capital.

The maximum amount of money companies can raise through the programme is 10% of their ‘manufacturing value addition’, which the government calculates by taking each company’s sales revenue and subtracting material input costs.

Companies that qualify include tanneries supplying the leathergoods and footwear industries and leathergoods manufacturers. However, the government has made it clear that leather suppliers to the automotive industry may not take part in the initiative.